Netflix helps shift Hollywood’s business model

HOUSE OF CARDS

Photograph by: Netflix
, Postmedia News

BEVERLY HILLS, Calif. — Nobody knows anything.

As tag lines go, that’s not likely to sell many movie tickets — or draw TV viewers — but in the immediate aftermath of San Diego’s Comic-Con and on the eve of the two-and-a-half-week Television Critics Association summer meeting in Beverly Hills, it’s the closest anyone’s likely to come to summing up the state of the entertainment industry in a way that’s honest, truthful and at least as reliable as this week’s box office figures.

The movie industry is on track for a record summer at the box office, according to the local trades Variety and The Hollywood Reporter, but the sunny news masks a lead lining. The major studios’ swing-for-the-fences strategy has backfired, with a summer of colossal flops resulting in what Variety called a blueprint for disaster, judging from the hundreds of millions of dollars in red ink spilled by the major studios over such costly non-starters as The Lone Ranger, After Earth, White House Down, R.I.P.D. and Pacific Rim.

And while hit movie sequels like Iron Man 3 and Despicable Me 2 have done their part in shoring up the overall summer box office record, there’s a feeling that shifting audience habits, fueled by viewing-on-demand and the ever-shortening window between a movie’s theatrical release and its appearance on iTunes, Netflix and other online services, is prompting a tectonic shift in Hollywood’s business model.

The situation is similar and yet different for the big screen’s smaller-screen cousin. Mainstream network TV series don’t demand that fans line up and buy a ticket to watch. They do demand, however, that enough viewers tune in to a specific show that advertisers remain happy. Advertisers continue to place bets on what’s becoming an increasingly unpredictable game, but — as with newspapers, magazines and the print media — it’s a gamble they may not want to keep taking in an increasingly uncertain future.

The proven paradigm of networks spending big to find that one elusive hit is no longer the sure thing it was. For the major networks and studios, TV today is all about playing the short game — rolling the dice on instant success — and giving up on the long game, which is how TV used to find its long-running, generation-defining like Seinfeld, Barney Miller, the Americanized version of The Office and even The X-Files, all programs which had modest beginnings and survived only because their parent networks were patient and willing to stick with them over time.

Last week’s Emmy nominations highlighted the impact changing technology is having on what was once popular entertainment’s most conservative, slow-to-change medium. Netflix’s arrival as a player in the Emmy game — the Netflix series House of Cards earned a surprise outstanding drama nomination opposite Emmy perennials Mad Men, Homeland, Game of Thrones and Breaking Bad, together with best actor nominations for its stars Kevin Spacey and Robin Wright — signalled that the old way of doing business is fast becoming a thing of the past.

One of the big industry stories at the beginning of the week was the growing interest in multichannel TV services from tech titans Apple and Google. Variety noted that as recently as July 17, Apple and Google were talking separately with media companies about licensing entire, full-blown TV channels. Apple was even said to be interested in providing an ad-skipping option for the viewer.

If true, and some tech experts insist the technology isn’t there yet, it could be the final blow to an industry already reeling from shifting winds of technological change. The 30-second ad has been the traditional lifeblood of the network TV business. Whereas quality-driven pay-TV channels like HBO, The Movie Network, Super Channel and Movie Central rely on subscribers willing to shell out extra money on their monthly on cable and satellite bills, the major broadcast networks get by on ads and ads alone.

For now, the networks and even ad-supported cable channels like Discovery, History and MTV are content to play the game the way they always have, by gambling that they and they alone know best what the audience wants — even though the evidence suggests that the old saw “Nobody knows anything” is as true now as when legendary Oscar winning screenwriter William Goldman coined it in his seminal 1983 book Adventures in the Screen Trade.

Viewers at home won’t have a chance to see them on TV the old-fashioned way until the official start of the new season in September, following the Sept. 22 Emmy Awards. In yet another sign of the changing times, though, the full pilot episodes of many new series will be available online, on their parent networks’ websites, in advance.

While it may be true that nobody knows anything and many of the old rules no longer apply, some rules remain — especially the one about the value of marketing.

As the summer box office duds show, though, sometimes even marketing isn’t enough. The times, they are indeed a-changin’. Change is the one constant.

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